Monday Afternoon Coffee - Markets Update - 19 May 2025 - Yields Climb as Moody’s Downgrades U.S.; Stocks, Dollar Slide Amid Tax Bill Concerns

The Trade Academy Team
May 19
2 min read

Markets Update: U.S. stocks edged lower Monday and Treasury yields jumped to multi-month highs as investors digested Moody’s downgrade of the U.S. sovereign credit rating and assessed the implications of a major tax bill advancing through Congress. The dollar weakened broadly, while gold continued its climb and oil held firm.

Global Markets Roundup: 19 May 2025

Stocks Dip as Debt and Fiscal Worries Mount

The Moody’s decision, which came late Friday, lowered the U.S. credit rating from the top-tier AAA, reigniting focus on the nation’s worsening fiscal path. Meanwhile, President Donald Trump’s sweeping tax proposal cleared a key committee on Sunday, increasing expectations of passage in the House this week—but also raising alarms over a ballooning debt load.

Major equity indexes opened the week in the red:

Dow Jones Industrial Average: -59.42 points (-0.15%) to 42,592.31
S&P 500: -24.46 points (-0.41%) to 5,933.92
Nasdaq Composite: -119.50 points (-0.62%) to 19,091.89

The S&P 500 had logged five straight gains heading into Monday’s session, but investor momentum faded amid macroeconomic uncertainty. Globally, equities tracked the U.S. downturn, with MSCI’s All-Country World Index off 0.20% to 878.89. In Europe, the STOXX 600 shed 0.17%, while Asia-Pacific shares outside Japan fell 0.5%.

Bond Yields Surge, 30-Year Hits 18-Month High

Treasury yields soared, led by the long end, as investors recalibrated expectations for future debt issuance under the new tax regime. The 30-year U.S. bond yield rose 9.4 basis points to 4.992%, after touching 5.037%—its highest level since November 2023.

Atlanta Fed President Raphael Bostic said Monday the central bank may only have room for one small rate cut this year, citing rising inflation pressures from elevated tariffs.

Dollar Drops, Gold Rallies Again

The U.S. dollar DXY declined for a second day, with traders shifting toward safer currencies and gold amid fiscal policy uncertainty.

The greenback hit multi-day lows against the yen, euro EURUSD, and Swiss franc:

USDJPY: -0.38% to 145.06

European Central Bank President Christine Lagarde, in a weekend interview, attributed the dollar’s weakness to eroding investor confidence in U.S. policy credibility.

Commodities Mixed; Energy Steady

Crude oil posted modest gains as investors weighed geopolitical developments and currency moves:

WTI Crude (CL1!): +0.24% to $62.64/barrel
Brent Crude (BRN1!): +0.06% to $65.45/barrel
Spot gold surged 1% to $3,234.34 an ounce. U.S. gold futures settled at $3,231.10, up 1.54%, continuing their climb on safe-haven flows.

In agriculture, cocoa climbed 0.6% to $10,967/ton on ongoing supply concerns, while coffee rallied 2% to $3.73/lb. Sugar edged up 0.3% to $0.18/lb.

Grains were mixed:

Soybeans (ZS1!): -0.17% to $10.48¼/bushel
Wheat (ZW1!): +0.43% to $5.27¼/bushel
Corn (ZC1!): +0.45% to $4.45½/bushel

Outlook

With the tax bill set to dominate the political agenda this week, markets remain on edge. Investors are also closely watching G7 talks, where Treasury Secretary Scott Bessent is expected to press trade partners amid escalating tariff threats.

Looking forward refer to the economic calendar below to see the upcoming events scheduled for today and the rest of the week.

General news - Information source from multiple newswires.

The article and the data is for general information use only, not advice!

The Trade Academy Team